Last week, KraneShares CSI China (KWEB) plunged to the $30 level, a new low. Despite Baidu (BIDU) posting strong results and Alibaba (BABA) reporting, sellers are exiting. Gaming firm Bilibili (BILI) also posted strong results only to fall.
What happened?
Baidu, a search engine giant, posted revenue growing by 9% Y/Y to $5.19 billion. Its iQiyi (IQ) unit reported 99 million subscribers in Dec. 2021. BIDU and IQ stock both fell on profit-taking. IQ stock is under pressure after it raised $285 million in a stock offering through a subscription agreement.
Bilibili posted revenue growing by 54.1% Y/Y to $907.1 million. Daily active users topped 72.2 million, up 34% Y/Y. The firm said it would manage to spend and narrow its loss margins. The macro headwinds suggest gaming stocks in China will keep falling. The government limited gaming time for youths. The regulatory crackdown will weigh on BILI and Netease (NTES).
Widely-held Alibaba touched a new low last week. The company reported poor revenue growth in the last quarter. Previously, the CEO said revenue would grow by 20% annually, down from the historical rate of over 30%. Alibaba’s e-commerce business is shrinking, thanks to the government.
Unless the Chinese government eases restrictions, Chinese technology stocks will keep falling.